Shaw Launches Movie Club, badly.

Today Shaw launched a new product aimed squarely at Netflix called Movie Club.  Movie Club is very similar to Netflix in that for a flat monty fee users have access to a library of video content that they can watch.  Movie Club itself is an interesting product, but this article is going to focus more on the Shaw's launch of the product today. I'll be frank.  Shaw fumbled the ball on this one, really badly.  A lot of the good talk about Shaw since the restructuring of their Internet plans has been hurt by how this launch was handled, and it is sad to see.

Confusion started literally minutes after the launch of Movie Club.  Shaw put out a news release, and several news publications put articles up on their respective websites about the new service. Even US based Ars Technica and Tech News Today ran with the story (though Tech News Today was able to correct the story at the end, thanks to a live chat room audience).  The reason for this is that the initial reports were that Shaw was going to deliver this service both to set top boxes and through the Internet, but that the delivery though the internet would not count against data caps on user's accounts.

Let me stop and say that again.  The initial reports were that delivery of Movie Club through the Internet would not count against a data cap.

I will stop you there again, because that is not true. But I will get back to that in a second.

Needless to say, the Internet kind of blew up at this.  Net neutrality proponents slammed the move, and many people got very upset at the fact that Shaw seemed to be putting in a plan that gave them an unfair advantage over a service like Netflix.

Then, came the "clarifications."  Shaw's official twitter accounts, Shaw employees speaking on Twitter, Facebook, and Internet forums on behalf of Shaw immediately came running to the public to say "No no no no."  It was clarified to me, along with everyone else, that watching content on Movie Club on a TV through a set top box via the Video On Demand interface would not count against a user's data cap, as the content is transmitted through the traditional QAM cable TV system that VOD content moves through.  Watching content through a computer or other device via Wifi goes through the Internet, and will count against a user's cap.  Shaw employees and PR spent most of the afternoon doing damage control, and trying to get the accurate information out there.  Several news publications put out new stories with clarifications, and Ars Technica updated their story (albeit much later than I would have liked).

So what happened? How did Shaw allow such confusion to happen on this launch?  I've done a lot of reading on the various news articles, and Shaw's news release for Movie Club, and the confusion comes from two simple things.

• The CEO was quoted as saying that on your box or online, this will not have any impact on your capacity or usage.
• The news release from Shaw had no indication one way or the other whether this would affect the data cap.

Now, with a quote from the CEO saying one thing, and a news release not disputing that, journalists ran with the idea that all Movie Club content would not count against the data cap. If I were working for one of the many publications that put articles out, I would have done the exact same thing given the information available to me at the time.  Could this be a case of a CEO being mis-quoted? Possibly.  But what is likely is that he just got a fact wrong, or just misunderstood a question.  either way he made a mistake.  Those things happen from time to time.  Engadget has a feature called "C-E-Oh no he didn't" that catalogs tech company CEO's that make mistakes, and it can be quite entertaining.  This is another one of those cases, and unfortunately for Shaw, it kind of blew up in their face.

To Shaw's credit, their PR team worked very hard all day to try to get the correct information out, to clarify to angry customers what the truth was, and to work with news media to get new or updated articles posted.  Unfortunately in most cases where mistakes are made, it takes 10x the amount of effort to fix them, and that is what Shaw faced today.  The net neutrality people might no longer be mad at them, but a new group of people are mad and accusing them of lying, trying to spread mis-information, and confusing people.  It only takes a quick look on Twitter, Facebook, or even Google+ now to see the anger at Shaw over the confusion on this launch.  The Shaw PR team was put in a difficult situation in which there was no way for them to come out in a good way.  i applaud the PR team for doing what they could to try to clean up a pretty nasty mess that was left behind for them.

This confusion during the launch has really masked the actual product they are trying to get off the ground. I've written almost 900 words to this point and I haven't even talked about the actual product that is Movie Club.  That is not a good thing for Shaw, at all.  I should have spent the last 900 words talking about the product, now how they fumbled the launch, and that is unfortunate.

As a quick recap of the above, in case it was still missed in there, Shaw Movie Club will not count against the data cap if being watched through a Shaw set top box via the Video On Demand interface.  Movie club will, like all content, count against the cap if watched through any Internet connected device like a computer or mobile device.

Now, onto the actual product itself, 997 words in.

Movie Club is a subscription service, much like Netflix.  I had actually heard about this service during the Shaw customer consultation sessions earlier this year.  The Shaw representatives there told us that they did have a video subscription service in the works, and that it was being considered as something that would be more valuable than Netflix, because they could deliver it through their existing Video On Demand service and not have it count against a user's data cap.  They stressed that while they probably could not match the volume of movies and TV that Netflix offers to customers, they wanted to focus on quality and getting newer blockbuster movies onto their service before Netflix could. They seemed very excited at this project that they were working on, that has now become Movie Club, but had asked us not to talk much, if at all about it because it was a product still in development and things could change before they launch, if they ever even did launch it. Today, that project finally saw the light of day, and Movie Club was launched. Unfortunately, it simply does not compare to what Netflix has to offer.

To start, Movie Club is a $12/month service, and that is for Standard Definition content only.  Movie Club HD will be launching "later this summer" and will be an additional $5/month, for a total of $17/month to watch HD content. Netflix is $8/month for the entire service, including all HD content.  That means that Movie Club is at a huge disadvantage out of the gate being $4 or $9 more expensive than Netflix. So, if Movie Club is going to be more expensive, it had better be beating Netflix on Movie selection.  However, a quick trip to the Movie club section of vod.shaw.ca shows a total of 139 movies available for streaming.  I don't have an exact number for the Netflix library, but needless to say it is significantly more than that.

But again, Shaw's word to us months ago was that their service would aim to go for quality more than quantity.  A quick look through the 139 titles currently available include many recent titles that are not available on Netflix in Canada, like Burlesque, The Blind Side, The Tourist, and Fast & Furious.  There are also many older moves that are both available, and not available on Netflix at this time.  There are definitely movies on the service that I would like to watch, some movies that I've never seen, but for me personally, I don't think that it is worth the price.  I honestly would not sign up for a SD service at this point.  I have a 47" HDTV and the though of paying $12/month to watch SD movies on it when I can pay $8 to watch HD movies simply does not make sense to me.  Would I pay $17/month for the HD content?  Again, probably not, because I can get many more movies in HD for less than half the price.  Sure, I can't watch Transformers: Revenge of the Fallen on Netflix, but I'm fairly sure that I can find 9-10 other movies that I'm perfectly content watching for less money.  What it comes down to is that for me to want to pay more for Movie Club than I do for Netflix, Shaw has to provide me with a very high number of movies that I want to watch right now that I can't get on Netflix.  And personally for me, they aren't even close.  Shaw does say that they are committed to adding new content every month, but that does not help the fact that right now, today, there are only 139 titles to choose from. Right now Shaw does not have the quantity to match Netflix, nor do they have a high enough number of quality titles to justify the price.

Does that mean it will stay this way forever? I hope not.  I really do think that a market does exist for newer movies on streaming services.  But Shaw's problem is that Netflix is desperately trying to get there as well.  If Shaw wants Movie Club to have any chance of success they either need to get a lot of newer (under 1 year old) blockbuster movies on there very soon, or drop the price significantly.  I think that people might pay a higher price to watch movies they can't see anywhere else, especialy if Shaw can swing a deal to get some movies on to Movie Club that aren't even available on Blu-ray or DVD yet. But as it stands right now; Shaw does does not have a competitive product.

Now, for all the confusion over the actual content delivery and whether or not it counts against a data cap, the fact that users can watch content as much as they want through a set top box and not have it count against a dat cap is one of the things that I actually do think is good about the product.  It is a value-add that Netflix quite frankly cannot match, and a good one at that. Many people have pointed out to me that doing that may get Shaw a visit from the competition bureau, and I think they are right.  But I also do not think that there is a problem.  If the story had been true that Shaw was providing the internet streaming and not having it count against their data cap, then there would have been serious anti-competitive issues.  But Shaw is offering an internet based service that is exactly the same as Netflix, with a value-add of the set top box delivery.  Shaw is not trying to make Netflix worse and less valuable than their product, they are trying to make their product better and more valuable than Netflix.  That is a very important, if a bit subtle, distinction that people need to understand.  You can do anything you want to make your service better as long as it does not purposely make someone else's worse.

the last thing I want to talk about is something I touched on a bit earlier.  Shaw launched Movie Club today in SD only.  In 2011, when HDTV's are commonplace, that is simply unacceptable.  I can't even begin to say how much that move does not make sense to me.  With the promise of the (more expensive) Movie Club HD service coming "later this summer" it would have made more sense to me to wait to launch the service until the HD portion was ready.  There is quite honestly no way I will even consider getting Movie Club in SD when it's main focus is on delivering newer movies, which are filmed specifically for HD, and do not look nearly as good in SD.  If I want to watch Transformers, I will be doing it via some method that will let me watch it in HD, which Shaw does not offer today.

To say that Shaw fumbled the ball today would be an understatement.  From communication issues early in the day, to actually launching at a product that is in many ways inferior to some of it's main competition, to launching without HD; Shaw made a mess of this product launch.  Could Shaw rebound from this and make a good product?  Absolutely.  Like I said.  I do think that there is a market for a "premium" streaming service.  However Shaw needs to get there before Netflix can do it cheaper if they want any chance of success, and they need to do it quickly.  It may be a bit unfair, but we live in a world where news moves fast, and in many cases the first impression is everything.  Shaw has left a very bad first impression here, and if not fixed quickly, they risk having the product slip into irrelevance before it even gets off the ground.  The product launched poorly today but it still launched. And because of that, the clock is ticking.  Can Shaw fix it before the time runs out? We'll see.

[Read] - Shaw Movie Club Press release (PDF link)

[Read] - Original Calgary Herald Article

[Read] - Montreal Gazette article with clarification

[Read] - Ars Technica article, original with update

[Read] - Shaw Facebook discussion thread.

[Read] - Shaw info twitter account.

The new Shaw internet reality–Bandwidth caps

Editor's note: This is part 1 of a three part series about Shaw's new bandwidth caps. For part 2 click here, for part 3 click here

As of January 1, 2011, Shaw is implementing a pretty significant change into how it charges for  internet service.  The company is going to begin enforcing bandwidth caps on all of it’s customers.  What does this mean? Your account has a limit on how much data you can use per billing cycle. If you go over that limit, they will charge you for every gigabyte you go over the limit.  For the two Shaw plans that would be most common, High Speed, and High Speed Extreme, these limits are 60GB and 100GB respectively. On the High Speed plan, the overage cost is $2/GB, and on the High Speed Extreme plan, the overage costs are $1/GB

So What’s The Big Deal?

Several things, actually, so bear with me.  Shaw has actually had caps on their plans for a long time, they have just never actively enforced them.  They have been used in the past only to act against the users who abuse the network the absolute most; users that go over the cap by several hundred gigabytes.  Until now they have never charged anyone any kind of overage fees on their accounts.  Why now? Shaw is reading the tea leaves, and it doesn’t like what it sees.  Did you know that as of 1 month ago, Shaw’s caps were actually 75GB and 125GB?  The caps were actually raised to that level several months ago, and Shaw was very proud of it.  Near the end of December, the caps were lowered back to their current levels.  People have asked Shaw about why that happened, and they say that the limits were raised as part of a pilot project, and that they showed that only 2% of their customers went over that limit.  The limit was dropped back to current levels, where about 10% go over the limit.

Speaking of trials: if you live in Edmonton, did you know that you were lucky enough to be part of the trial program for this new system, running from October through December?  Neither did I, until near the end of December.  Edmonton was chosen as the test ground for it.  Thankfully we are not being charged right away, and are being reset back to the first notification level so no one in Edmonton will be charged in January.

Who Cares if Only 10% Go Over The Cap? They Should be Charged then.

Those are *current* usage levels.  With the current path that media and entertainment is going, that level is going to go up, and go up fast in the very near future.  A few months ago, Netflix launched in Canada.  For those who do not know, Netflix is a streaming video service available that allows you to stream movies and TV shows to your TV, or other device.  This service is $8/month for all you can eat video, meaning you can watch as much Netflix video you want for $8/month.  Admittedly, the selection in Canada right now is not fantastic, but new content is being added literally every day, and much of it is in HD.  You can watch Netflix right now on your PC, iPhone, iPod, iPad, Apple TV, Playstation 3, Xbox 360, and Nintendo Wii.  More devices will be added in Canada in 2011, including blu-ray players, TV’s, and many other internet enabled set top boxes.  This means that this functionality will simply come built in to at least one new device that people buy within the next year or two.  That type of market penetration means that Netflix will see increased use simply because almost everyone has access to it.  I have measured how much data Netflix uses, and 1 hour of Netflix streaming in HD via my Playstation 3 came in to be about 2GB.  With the average movie being 2 hours long, that is 4GB per movie.  Two movies a week over the course of a billing cycle will work out to 8 movies x 4GB/movie.  That is 32GB, or just over half of your monthly bandwidth cap alone.  If you are already over your cap, it will cost $8 to watch a single move on Netflix, beyond the $8/month you pay to use the service.

Netflix is not the only service that will be affected.  Cineplex Odeon just announced a program to allow people to purchase movies online. Apple has had this service for years with it’s iTunes store, where the average HD movie is close to 2GB.

Each TV network in Canada (Global TV, CityTV, CTV, and CBC) offer free streaming of their TV shows online, which is very helpful if you miss an episode of your favorite TV shows, or want to watch a part of the news again.  At least two of the networks, Global TV and CityTV, offer apps for the iPad specifically designed for this.  While not as high quality as Netflix, watching a TV episode on those websites will be a few hundred megabytes each that counts against your cap.

The other big entertainment venue that will be affected by this is gaming.  There are many services that allow games to be purchased and downloaded online.  The more popular ones include Steam and Direct2Drive, along with the Xbox Live store and Playstation Network Store.  Many new games run in the 10-15GB range, each.  World of Warcraft, for example, is currently 19.9GB.  That is 1/3 of my cap to buy and download a single game, or almost $40 if I am already over that limit.

The last service I will mention is online backup services. I personally use Carbonite for online backups primarily for off site backup of my pictures.  It is not a huge deal right now, since I don’t add much to my Carbonite backup, but first time users who might have 10GB of pictures to upload to back up, that counts against your cap that month.  If you go on a holiday and take 4GB of pictures that you want backed up with those services, that counts against your cap.

These services are only going to become more popular, not less as time goes on.  And these new caps put in place by Shaw are going to severely limit what people can do with this content.

Will This Affect Most People Today?

In a word, probably not.  Okay, that was two words.  The average family of 4 will probably have issues, but one average person, especially on 100GB, might not have any issues with this at all, today.  But within a year, maybe two, this will become a significant issue for many more people.  This issue, while still affecting people today, will only become bigger over time, and will catch people unaware 6 months, 9 months, or 12 months from now, as their usage naturally increases over time as the internet gets used for more and more services.

What Does Shaw Say?

Sadly, not a lot.  They do offer several ways to lessen the blow of this. First off, let me emphasize:  SHAW WILL NOT BE CHARGING YOU THE FIRST TIME YOU GO OVER YOUR LIMIT. You will receive two notices on page two of your bill the first two times you go over the limit on your plan.  Shaw *will* begin charging the 3rd time you go over your limit.  Shaw’s High Speed Extreme package is probably their best bang for the buck deal right now.  For only $10/month more than High Speed, you do get 40GB more data and the overage costs drop in half.  They also offer “data packs” which allow you to add bandwidth to your account for a reduced rate.  Those packs are $5 for 10GB extra, $20 for 60GB extra, or $50 for 250GB extra. Those can be added to your account at any point up to 3 days before the end of your billing cycle to reduce the overage costs, but will remain on your account unless you remove them manually.  Shaw will also provide you with a tool to monitor your bandwidth on your account page at secure.shaw.ca.  However, Shaw will not turn this tool on until after you have already exceeded your bandwidth once.  So the average user will use up one of their two strikes without even realizing it.

So Why is Shaw Doing This, Exactly?

Shaw’s statement says that they are doing this to ensure better management of their network, and to ensure that all users have equal access on their network. They say that the minority of the users use the majority of the bandwidth on the network, and they have the right to manage that.  Now, I will fully admit that that is true.  The minority of users right now do use the majority of the bandwidth on their network. One Shaw rep has said that 9% of users use 50%.  Is that a problem? In many ways, yes.  However, I personally believe that will even out over time as more users discover things like Netflix, or other similar streaming services.

However, this has been the case for years, and it’s only now that they have chosen to start enforcing their limits.  There are several possible reasons for this. Now, these are mostly my personal opinions. I have no proof of this, but this is what I think makes sense.

Shaw sees the coming threat of those online services to it’s cable TV service.  Shaw Video on Demand movies are in the $5/each range, where Netflix is $8/month for unlimited video.  Why would people want to pay/rent a Shaw DVR when you can watch TV shows that are missed online legally for free with ads, or pay $2 to watch them on iTunes.  Of course Shaw would rather you pay to use their service than pay someone else to get that same content.  The goal here seems to be making all of the other services so expensive to use that the majority of people will have no choice but to use the Shaw services.  That seems the most likely explanation.

Another possibility, one which I have no real proof at all, is that Shaw is in the middle of two very expensive endeavours.  They just purchased the Global TV network for $2 Billion.  Shaw is also building out a wireless network, and will be launching a Cell Phone service in Western Canada in 2011.  These are very expensive programs, and Shaw probably needs ways to recoup that cost.

You Sound Like You’re Totally Against Capped Internet.

As much as I’ve hated on Shaw so far here, I’m actually not.  My problems lay mainly with a couple things.  First off, Shaw’s limits are very low.  As stated above as usage naturally increases, users will have a very difficult time staying under the 60GB cap on the High Speed plan.  Think of the average family of four, all of whom use computers and the internet.  Restricting each user to 15GB/month, or even 25GB a month when a single Netflix movie is 4GB, and a single game might be 15GB, is practically impossible.  The internet with Shaw may become like cell phone plans, where a teenager who downloads a large amount of content without knowing that there are limits, or a household just having an above average month, can have a Shaw bill significantly larger than normal, placing a burden on that family.  Buying 3 large games and watching 4-5 movies over the limit would take a $37 bill on 60GB up to $137.  And those months can easily happen. Someone could get sick and just want to watch movies on Netflix for two straight days (as recently happened to me, actually), someone could buy 3x20GB games in a month.  That can easily happen in real life.

However, I do believe that the true abusers of the system should be penalized.  If your use is 10x the average, I do believe that they should have to pay overage charges. But the average person who just has a month where they watch 5 more movies than normal should not be penalized.  In 2008, Comcast, an internet service provider in the United States, became among the first large ISP’s to place a cap on their internet bandwidth in that country.  Their limit on all of their plans is 250GB, slightly over three times more than Shaw’s limit on High Speed.  That limit, in my opinion is more than fair, and only punishes those who truly use significantly more than the average.  Some people with disagree with me on this, that the internet should be truly unlimited forever, but the internet is becoming like a utility, and no utility is an “all you can eat” plan.  I completely disagree with Shaw, but I’m also fair.

The second thing that really frustrates me and upsets me as a Shaw user is the complete secrecy in which Shaw has started this program.  The pilot project in Edmonton started without anyone’s knowledge.  The only indication that this was happening was for people who went over their limits for the billing cycle who received a two line notice on page two of their Shaw bill.  Shaw also has not notified the entire customer base of these limits, choosing only to send letters to users who have gone over the limit at some point in the past.  I am not sure how far back they are going to notify people. I know for a fact that I was over my 60GB limit in either August or September, and I did not receive any notification.  Shaw should at the very least be notifying, in plain text, it’s entire customer base that this new program is going into place. The number of people that this could affect is staggering.  Shaw has about 1.5 Million customers.  If 10% of their customers go over, that is 125,000 customers that will be affected by this system, and that number will only go up in time as more users discover more internet services.  The fact that Shaw has kept the vast majority of it’s users completely in the dark about so many of it’s services is a very bad thing, and something that I as a consumer do not appreciate.  My absolute favorite thing to say about this is something that I sadly have no physical proof of, yet I have seen with my own eyes.  Shaw’s Terms of use page currently lists a last modified date of May 13, 2010.  I know for a fact that in mid December that Terms of use had the higher 75GB and 125GB limits in the document.  By the end of December, the Terms of use now reference the 60GB and 100GB limits., while still stating a modified date of May 13, 2010, while they clearly have been modified since then.  I do not have a screenshot from before this, so I sadly cannot prove this to be true, but I looked, and I know what I saw.  That kind of practice does not leave me with a good feeling about Shaw.

EDIT: Note that as of January 13th, the Shaw Terms of Service have been updated to reflect a modified date of December 15, 2010, and that is no longer reads at July 20th.

So What Are The Options?

There aren’t very many good ones, honestly.  If Telus has the Optik TV service in your area, switching to Telus is something that is a possibility.  Telus’ Optik TV and internet packages actually provide better service and value for a very comparable price to Shaw’s offerings, and a Telus representative has stated on camera that they will not be capping and charging for overages on their network.

The only other real option is to call Shaw and voice your displeasure and concerns.  Talk to managers, not the front line staff.  Talk to the highest person you can get a hold of.  The best option is to get Shaw to either dramatically increase the limits to reasonable levels, or to remove them altogether. If there is enough of a customer backlash, anything is possible.

Are you done now?

Almost.  I just want to say a few quick things to close.  First off, much of the information I have put into this post comes from a series of forum posts.  So while I cannot confirm their accuracy 100%, many things that they have said have matched the few mainstream media reports, and the few official things that Shaw has published.  Other information I gathered from Wikipedia, Global TV, CTV, CityTV, the CBC and the Globe and Mail.

I asked that you call Shaw and provide your feedback against this new system, and the way it was implemented.  One thing that I do ask is for anyone calling to remember that the first person you talk to is likely a front line staff member who has absolutely nothing to do with the decisions that were made.  These are staff who do their best and take a lot of angry calls every day.  Please be kind to those people, your problem is not with them, it is with the decision makers.  If you do not have a positive experience with the front line staff you speak with, ask to talk to their manager, and keep going up the chain until you get someone who is reasonable.

One thing that I ask of you, the person reading this, is to spread the word.  As I have stated, very few people have been notified of this, and fewer really know all of the issues with this change to Shaw’s services.  This is an issue that deserves more attention, and the more people that know about it, and ask questions, the better.

And lastly, You may have noticed that I have kept discussions on this article to services that are legal.  I know that there are perfectly legitimate uses for services like Bittorrent, but I also know what most people use it for the majority of the time.  I welcome discussion in comments, but please note that all comments are moderated before going up, and that any posts talking about illegal services and uses of internet service will not be approved.  Please keep all discussions civil.